CRM and Software-as-a-Service Industry Consolidation
CRM industry consolidation can result in new leverage and synergies or failed integration. Oracle made over 21 company acquisitions in a two year period and now attempts to integrate them all under project Fusion. Microsoft acquired five different product lines under the Dynamics banner, began Project Green to merge those products and ultimatetly abandoned that project.

CRM Industry Consolidation History
The consolidation recap belows shows how this industry is morphing into a very large market place being served by fewer and fewer players.

In January 2011, Salesforce.com announced its acquisition of online web conferencing and meeting service provider, dimdim for $31 million. It's expected that dimdim will be folded into chatter to provide additional collaboration capabilities.

At DreamForce 2010, Salesforce.com announced the definitive agreement to acquire Heroku for $212M, a 30 employee company and Ruby platform-as-a-service (PaaS) solution that powers more than 105,000 social media and cloud applications and will be rolled into Salesforce's cloud product suite.

In August 2008, Salesforce.com acquired knowledge management company InStranet for $31.5M. The on-premise call center software was converted to the multi-tenant SaaS model and rebranded as the ServiceCloud2 Knowledge module. InStranet's founder, Alex Dayon, has since taken the rains for the company's customer service and support operation.

In March 2007 the company acquired content management system maker Koral Technologies, again for an undisclosed sum and without announcement. The acquisition of this nine person startup and their AppExchange product culminated in the Salesforce Content solution.

In January 2007, Salesforce.com acquired CrispyNews also for an undisclosed sum. In fact this acquisition actually went unannounced for several months. The acquired technology later became the much publicized Salesforce.com Ideas social media solution.

In August 2006, Salesforce.com acquired PPC/adwords integration startup Kieden for an undisclosed sum. The acquisition of the four person company resulted in the rebranded Salesforce for Google AdWords solution.

Salesforce.com acquires Koral Inc of San Mateo, CA, a 9 person company and maker of a content management application; Terms not disclosed (April 10, 2007)

Acquires ACCPAC CRM (and renames it to SageCRM) which had previously acquired eWare

Acquires SalesLogix, which had previously acquired ACT!

Acquires TeleMagic

Maximizer Software

Acquired Tracker and Cognitech (SharkWare)

Your Vendor Has Been Acquired
According to a Gartner prediction, 2008 will see one-third of the CRM application vendors taking part in a consolidation or acquisition.
So what do you do when you learn your CRM vendor has merged or been acquired? We offer these four starting tips:

First, don't overreact. The first official announcement will of course sing the alleged virtues of the merger - you know, things like combined strength, broader knowledge, deeper resources and nearly endless claims of synergies. Some of these benefits may actually be true. Take your time and try to decipher which claims may be both true and relevant to your company.

Second, if your vendor has merged with another, understand which organization is in charge. While the term 'merger' implies parity for the two organizations and some announcements will even use phrases such as "consolidation of equals", make no mistake that one of the two organizations is dominant and the new corporate culture are likely to transfer from the dominant company to the new company. This occurance may impose a very different relationship between you and your vendor.

Check your software license or subscription agreement. Chances are the new organization will continue to honor prior agreements, however, it is also likely there will be a change when your agreement is up for renewal.

Give the new entity some time to prove their claims and deliver new benefits. Seldom is their a need to change information systems right away simply due to vendor merger or consolidation. Certainly, if the integration of the two companies fails to occur or the new combined entity delivers less value, you will want to explore alternatives.

We fully expect that the hosted CRM market will ultimately consist of only five or six software manufacturers. This oligopoly will result in high barriers to entry for smaller start-ups, new deals being taken away from direct competitors and a lack of pressure for price compression.